Elaina Batista, Asst. Social Media Editor
In late August, the Trump administration announced that they had taken a 10 percent stake, equivalent to an $8.9 billion investment, in Intel, an American multinational technology company.
According to White House economic advisor Kevin Hassett, the government’s stake in the company is part of a broader strategy to create a sovereign wealth fund that could involve more companies. Many conservatives and economic policy experts are worried that this could potentially undermine free enterprise.
This 10 percent stake will be largely financed from grant funding associated with the CHIPS and Science Act, while the rest will be under separate government allocations. Intel’s chief financial officer announced that the company has already received $5.7 billion as part of the deal that President Trump and his administration negotiated.
Trump took to Truth Social the day the deal was announced, posting, “It is my Great Honor to report that the United States of America now fully owns and controls 10 percent of INTEL, a Great American Company that has an even more incredible future.”
At its core, the agreement is designed to bolster U.S. semiconductor production and secure the country’s place at the forefront of the global chipmaking market. Some analysts have suggested it may also serve as leverage in upcoming trade negotiations. Trump stated in early August that he plans to impose a 100 percent tariff on semiconductors coming into the country, except for companies that have committed to building products in the United States.
World Bank analysis found that companies with at least 10% government stake had on average 32% lower labor productivity than private firms, and were around 6% less profitable.
This deal has not been met with open arms from the Republican party. Senator Rand Paul of Kentucky criticized the Trump administration’s decision on CNBC last week, calling the investment “a step towards socialism.” A big step into the private sector, the decision has raised concerns among other lawmakers who have opposed big government.
Additionally, in August, the Trump administration said that the government would take 15% of certain Nvidia and Advanced Micro Devices chip sales to China, as reported by CNBC. These two companies are seen as critical players in the rapidly expanding artificial intelligence industry. On the other side of the aisle, one of the most vocal supporters of Trump’s Intel deal has been Senator Bernie Sanders of Vermont.
According to CNBC, Sanders told news outlets last month, “Taxpayers should not be providing billions of dollars in corporate welfare to large, profitable corporations like Intel without getting anything in return.”
Many supporters of this deal argued that this move is completely necessary to control industries that are vital to national security – a pillar of policy that Trump ran on for his presidency and that he has been vocal about since taking over office.
Trump’s share in Intel highlights the growing role of semiconductors in both economic and national security policy. As the U.S. makes steps to safeguard the nation’s technological leadership in an increasingly competitive global market, the balance between public and private interest has yet to be seen.